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BEIJING — Two senators have asked senior American trade officials to look into whether Beijing's financial support for Chinese oil company CNOOC Ltd.'s bid to buy Unocal Corp. violates World Trade Organization rules.

Sens. Kent Conrad (D-N.D.) and Jim Bunning (R-Ky.) said financing provided by Chinese state-owned banks for the bid is a direct and improper state subsidy, according to a letter to U.S. Secretary of Commerce Carlos Gutierrez and Trade Representative Robert Portman obtained by Dow Jones Newswires.

CNOOC says the offer is a purely commercial transaction and it has rejected accusations that allowing a Chinese state-controlled company to take control of the ninth-largest U.S. oil company might threaten American national security.

According to the letter, Conrad and Bunning said some $16 billion of the purchase price would come from Chinese state entities at lower-than-market rates of interest.

"The proposed CNOOC transaction, which represents the continued government involvement and control of the commercial activities of state-owned enterprises in China, is a powerful example of why China is not ready to be deemed a market economy," the letter said.

"Without this subsidy it is clear that CNOOC's bid would be uncompetitive and not worthy of consideration by Unocal shareholders," it said.

The rules of the free-trading WTO restrict government subsidies and other state involvement in commercial activities.

Conrad and Bunning said they were "deeply concerned" about economic and security implications of CNOOC's bid, the letter said. It appealed to the government of U.S. President George W. Bush to review China's compliance with its WTO commitments in light of the CNOOC bid.

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